India has increased the purchase of crude oil from Russia and United Arab Emirates (UAE) in June. According to analysts, Indian refineries have increased imports to ensure adequate reserves before the reopening of the Strait of Hormuz and the full restoration of crude oil supplies from the Gulf countries. According to data from maritime and commodity intelligence company Kpler, till June 19, India imported an average of 26.6 lakh barrels per day (bpd) of crude oil from Russia, which was 19.1 lakh bpd in May.
Along with this, Russia remains India’s largest oil supplier. Imports from UAE in June stood at 6.36 lakh bpd, which is close to May’s record of 6.44 lakh bpd. At the same time, Venezuela emerged as India’s fourth largest crude oil supplier with 2.09 lakh bpd. Import from Saudi Arabia stood at 3.84 lakh barrels per day. In contrast, oil imports from America decreased to 91,000 bpd, whereas in May it was 2.52 lakh bpd.
India’s diversified policy
The strategy of diversification is clearly visible in India’s procurement policy. Subsidized crude oil from Russia remains attractive, while increased purchases from the UAE helped ensure supply security amid uncertainty over the Strait of Hormuz. India is the world’s third largest energy importer and is heavily dependent on the Gulf region for its crude oil, LNG and LPG needs. Global energy supply was affected due to the closure of the Strait of Hormuz by Iran after the attacks by America and Israel. This waterway is considered the main way to transport about 20 percent of the world’s oil consumption.
India will get the most relief
However, after the ceasefire agreement between America and Iran, the movement of oil tankers has started again since last week. Despite this, concerns remain about the durability of the ceasefire. Kepler Senior Manager (Modeling) Sumit Ritolia said that with the opening of the Strait of Hormuz, India will get the fastest relief in LPG supply, while the import of crude oil and LNG may take some more time to normalize. He said that India has already adapted to the constraints of several months through alternative sources and supply routes. Therefore, first the LPG supply will be normal, then there will be complete restoration in the supply of LNG and then crude oil.
Purchases from Venezuela also increased
According to Ritolia, India’s oil imports from Russia in June are likely to exceed 23.5 lakh bpd and create a new record. Russian oil will remain an important part of India’s imports in future also due to competitive discounts and stable demand. He said that since March, Indian refineries have also increased purchases from the Atlantic region and Venezuela to compensate for the reduced supply from the Gulf region. Imports from Venezuela in June are expected to be three to four lakh barrels per day. According to the report, the biggest change has been seen in the LPG sector. America has emerged as a major LPG supplier to India after supply from the Gulf region was affected. Although this has increased diversification of supply, transportation costs have also increased due to longer distances.
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